FTC Can’t Refund Consumers in Deceptive Investment Scheme

The U.S. Supreme Court’s 2021 decision in AMG Capital Management v. FTC continues to hamper the Federal Trade Commission’s work, and the Commission rightly is shining a spotlight on it. In a recently announced enforcement action, the FTC lamented the AMG decision, which it said limited its ability to secure refunds for duped investors of a company that deceived them about its investment and trading services.

The company, RagingBull.com, and the people behind it allegedly made deceptive claims about their investment strategies and earnings in their advertising, including deceptive testimonials about claimed profits, where users actually lost a lot of money using the services. RagingBull, its officers, and salespeople even marketed COVID-19 investment strategies. According to the FTC’s complaint, the investment scheme charged consumers thousands of dollars for services through subscriptions and made it difficult for users to unsubscribe. The FTC alleged that in the past three years alone, the entity, its officers and its salespeople defrauded consumers out of more than $197 million. It brought claims against them under the Federal Trade Commission Act, including Sections 13(b) and 19, and 5(a), and under the Restore Online Shoppers’ Confidence Act.

For decades, the FTC had relied on Section 13(b) to seek refunds for consumers deceived and defrauded by scammers. But the AMG decision upended that authority when the Court held that Section 13(b) of the FTC Act does not in fact authorize the Commission to seek equitable monetary relief such as restitution or disgorgement on behalf of consumers. So, in this case, where the FTC alleged that one of RagingBull’s salespeople personally procured over $13 million from the investment scheme, the agency could not seek any of that money to provide restitution to the defrauded consumers. Instead, the FTC’s recent announcement was limited to a proposed order that would permanently prohibit the salesperson from misrepresenting potential earnings and from generally making any false or misleading marketing claims.

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